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High Stakes, High Costs: Why Big Banks Can’t Afford to Ignore Discrimination

A amle banker holding a gavel and baseball bat, surrounded by buildings, a lion and a woman with wings

Let’s dive into the high-stakes, high-drama world of the U.S. financial services industry, where the buzz of Wall Street often echoes with the clang of costly legal battles over employment discrimination. Picture this: a world where suits are sharp, stakes are sky-high, and sadly, ethical lines too often blur.

Flash back to the notorious ’90s “boom-boom room” case at brokerage powerhouse Smith Barney, a stark reminder of the industry’s deep-rooted gender discrimination and sexual harassment problems at banks. Fast forward to today, and the echoes of these issues still resonate, as revealed in a recent exposé by the Wall Street Journal on the Federal Deposit Insurance Corporation’s toxic and discriminatory culture. 

Why is this sector a magnet for such lawsuits? Well, think about the mix of factors here: a historically male-dominated arena, a culture that’s more competitive than most, an intensely transactional environment, and pots of money that often stir up the worst in human nature.

Most of the U.S.’s major financial institutions have been hit by high-profile discrimination lawsuits. Smith Barney settled the boom-boom room case for $150 million, according to the New York Times. Some 2,000 women joined the case, named for the basement party room at one of the brokerage firm’s New York branches. The FDIC, a federal agency created to sustain public trust in the banking industry, is under fire for enabling a toxic workplace culture with sexual harassment and misogyny and will be investigated by a House committee. Earlier this year, banking giant Goldman Sachs paid $215 million to settle a class-action gender bias lawsuit with 2,800 female plaintiffs, CBS News reported. Citigroup was recently levied $26 million in fines and restitution for discrimination targeting Armenian-American credit card applicants. Bank of America Merrill Lynch paid roughly $200 million in settlements for discrimination around gender and race, according to Investment News, as well as religion and nation of origin. JP Morgan Chase will pay $365 million in settlements for maintaining disgraced financier and sex trafficker Jeffrey Epstein as a client, according to the Wall Street Journal. The list of banks and suits goes on. 

Much of this could have been avoided with Reflect AI, which preemptively identifies discriminatory and other problematic language in digital communication. Reflect AI is an add-on for desktop email and works in real-time, to flag and detect problems before they become full-scale legal battles. 

Here are two statements that women at the FDIC were subjected to by male coworkers, according to the Wall Street Journal: “Women need to use sex to get ahead at the FDIC” and “Obviously, if I walked into this office and you were naked, I'd f— you right now.” 

Imagine if they’d nipped statements like those in the bud, before they could fester and corrode the integrity of the organization.

Of course, it’s not all doom and gloom. There’s a wind of change as firms wake up to the need for respectful — and fair — workplaces. Ethical standards have been tightened, coupled with a stronger push for accountability. New compliance technology, including Reflect AI, is being deployed by banks and financial institutions to protect against harm. It’s a new shields-up approach to helping companies be vigilant to threats coming from within. 

That’s something for businesses to bank on.

Julian Guthrie is the founder and CEO of Alphy.

Reflect AI by Alphy integrates with email to detect risks prior to sending, and flags conversational missteps and successes in real time. If you are interested in getting Reflect AI for your company, contact us at or download Reflect AI for Gmail or Reflect AI for Outlook.


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